Shipper: It's U.S. vs. foreign-owned firms

A little-known program meant to salvage America’s shipping opportunities overseas and promote national security interests has largely helped feed foreign-owned companies. The question is whether the country is better off for it.

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As the Senate tackles a defense authorization bill that quietly revisits the program, the industry finds itself caught in a debate over American identity, safety imperatives and the function of foreign owners in a fading U.S. carrier market.

And money.

A provision in the bill extends funding for 60 commercial ships intended for military use through the Maritime Security Program. Most ships in the program — about 82 percent — come from foreign parents. Danish shipping company Maersk controls almost half of them.

New York shipowner Philip Shapiro — in a man-against-the-world scenario — has gone against the U.S. military, the Transportation Department and many in the maritime industry to protest the reauthorization framework and the MSP process. He argues it secures current participants, shortchanges competition and hinders American ships also seeking to benefit from the $2 billion program.

“All I want is the right to compete in a fair, open and transparent process,” Shapiro told POLITICO from the K Street offices of Winston & Strawn, a prominent maritime law firm he has snagged to help lobby for his cause. “What does the government have to lose? Why preserve market domination and over-concentration in foreign hands?”

Congress has already passed legislation to continue the MSP through 2025. The new language helps detail the specifics on financing. The provision — also embedded in the Coast Guard authorization bill passed by the Senate — offers a time frame to extend operating agreements, grants the military more flexibility to determine ship requirements and boosts funding levels. Each ship’s subsidy would eventually increase from $3.1 million to $3.7 million.

MSP came about as an outgrowth of lagging American flag ships during the first Persian Gulf War. Now the government doles out millions to establish a commercial fleet that can stand in during a national crisis and haul overseas military everything from fuel to food. As the American shipbuilding industry has declined, foreign companies and their U.S. subsidiaries have jumped in to fill the gap.

Shapiro says they’ve unfairly usurped it. And he contends the strengthened military role for awarding contracts would only further slight American ships.

He’s found an ally in fellow New Yorker Sen. Chuck Schumer, who has started voicing concerns about MSP’s structure.

“It is unfair to freeze out U.S.-owned companies from this program,” the Democratic senator told POLITICO in a statement. “We should put these slots out for bid rather than grandfathering in a system that doesn’t allow competition.”

A Senate aide said Schumer will be “looking at opportunities to get a fair result.”

DOT’s maritime agency and the Department of Defense’s United States Transportation Command, which helped with the provision, say the program already does that by ensuring national defense needs and providing more than 2,000 jobs for the country’s Merchant Marine.

“We believe the proposed changes will keep the program viable for years into the future,” said USTRANSCOM spokesman Capt. Rick Haupt.

Readers' Comments (2)

POLITICO - “All I want is the right to compete in a fair, open and transparent process,” Shapiro told POLITICO from the K Street offices of Winston & Strawn, a prominent maritime law firm he has snagged to help lobby for his cause. “What does the government have to lose? Why preserve market domination and over-concentration in foreign hands?”

The bill was passed thru- 2025 but it is possible to at least allow these USA-Shippers to get a "Fair-Share" via internal execution-orders via actual "Letting of Contracts" = why not throw a "bone to an aging industry?"

foreign interests have been and are now quietly taking over the U.S. economy. Thanks to both Bush era republicans and democrats. Time for a new Republican party, seperate from the GOP. One that puts our nation, its citizenry and its economy 1st. One that is not afraid to use the dusty tool in the tool box that is never used - tariff's. Time to enforce Fair Trade and keep US owned businesses in the forefront.